) posted net earnings of $362 million or $1.94 per share
(excluding special items) in the third quarter of 2013, lagging
the Zacks Consensus Estimate of $2.10 per share. However,
earnings increased from $336 million or $1.78 per share in the
comparable year-ago quarter.
Revenues in the quarter rose nearly 4% year over year to $4.3
billion, mainly driven by strong demand in North America.
Revenues were in line with the Zacks Consensus Estimate.
Revenues in North America improved 11% but international
revenues dipped 4% in the quarter. Within the international
markets, weaker demand in Europe, India and Australia offset the
improvement in Brazil and China.
Operating income increased about 6.3% to $524 million from
$493 million a year ago. Earnings before interest and taxes
(EBIT) increased 8.1% to $536 million or 12.6% of sales, compared
with $496 million or 12% a year ago.
Sales in the Engine segment fell 1% to $2.5 billion due to
lower demand in stationary power, global mining and the
light-duty on-highway market in the U.S., partly offset by higher
demand for medium-duty truck engines in North America and
Brazil. Segment's EBIT increased 13.8% to $272 million or 10.9%
of sales, compared with $239 million or 9.5% a year ago.
Sales in the Components segment grew 14% to $1.1 billion on
the back of strong on-highway demand in Europe, China and North
America. Segment's EBIT surged 48.3% to $132 million, or 12.3% of
sales, versus $89 million or 9.5% in the prior-year quarter.
Sales in the Power Generation segment went down 13% to $712
million due to low demand in most international markets,
partially offset by higher revenues in North America. Segment's
EBIT fell 38.4% to $45 million, or 6.3% of sales, compared with
$73 million or 9% in the third quarter of 2012.
Sales in the Distribution segment rose marginally by 2% to
$944 million (excluding acquisitions) on increased power
generation and parts sales in North America, offset by a decline
in sales in South Pacific and China. Segment's EBIT declined
13.1% to $86 million, or 9.1% of sales, versus $99 million or
12.4% a year ago.
Cummins' cash and cash equivalents increased to $2.5 billion
as of Sep 29, 2013 compared with $1.4 billion at the end of 2012.
Long-term debt increased to $1.78 billion as of Sep 29, 2013 from
$759 million as of Dec 31, 2012. Consequently, long-term debt to
capitalization ratio rose to 20% as of Sep 30, 2013 from 10.3% as
of Dec 31, 2012.
In the first nine months of the year, Cummins' net operating
cash flow surged to $1.33 billion from $787 million in the
prior-year period. Capital expenditures declined to $417 million
from $424 million in the year-ago period. Cummins has repurchased
$289 million worth of its shares during the period compared with
$231 million a year ago.
For 2013, Cummins expects revenues to decline 3% from the 2012
level, compared with the earlier guidance of in-line results. The
company also reduced its 2013 EBIT margin guidance to 12.5%-13%
Further, Cummins expects to achieve revenues of $25-$31
billion and EBIT of 16%-18% by 2018.
Cummins Inc. is a leading worldwide designer, manufacturer and
distributor of diesel and natural gas engines, electric power
generation systems, and engine-related components, fuel systems,
controls and air handling systems. Currently, CMI retains a Zacks
Rank #3 (Hold).
Other stocks that are performing well in the industry include
Tower International, Inc.
). All three companies carry a Zacks Rank #1 (Strong Buy).
CUMMINS INC (CMI): Free Stock Analysis Report
DENSO CORP (DNZOY): Get Free Report
GENTEX CORP (GNTX): Free Stock Analysis
TOWER INTL INC (TOWR): Free Stock Analysis
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